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Released: 7/9/2010

Factual Response To NJN Report

NJN recently ran a series of stories regarding the Delaware River Port Authority on certain management and fiscal practices. Our response and links to the related documents can be found below.

Ed Kasuba

Director of Corporate Communications

MEMORANDUM

DELAWARE RIVER PORT AUTHORITY of Pennsylvania & New Jersey

To:

From: DRPA

Subject: Factual Response to June 30, 2010 NJN Public Television Report on DRPA

Date: July 7, 2010

The management and fiscal practices of the DRPA were recently questioned in a televised report on NJN. A full transcript of the report is attached. As will be clear upon reviewing the following information, this NJN report demonstrates the pitfalls of relying on unnamed sources and on failing to make reasonable efforts to verify information provided by such anonymous sources.

NJN claims that the story came to them from an unnamed Northwest New Jersey legislative office*. NJN does not explain what “story” was told to them nor does NJN explain why it cannot reveal the source of the alleged story. NJN further claims that three former DRPA employees have “verified” the story that NJN is broadcasting. NJN characterizes, perhaps improperly, these alleged sources as “whistleblowers”. The term “whistleblower” is a legal term that has a specific meaning and nothing in the NJN report would support a claim that any source would qualify as a whistleblower under the New Jersey Conscientious Employee Protection Act (CEPA) or otherwise. There is no statement indicating why NJN, in addition to concealing the alleged source of the original “story” chooses to conceal the identity of the sources that allegedly “verified” that story. In the course of their story NJN also refers to certain unnamed “insiders” without explaining who these alleged sources are or why they also cannot be named. Although the NJN report includes an allegation that DRPA wasted millions of dollars in economic development funds, i.e. a “slush fund”, the actual NJN report contains only one item relating to such funds and that was a project in which DRPA had a minor role and on which DRPA expended $40,000.

* In a subsequent story run by NJN on this matter on Tuesday, July 6, 2010, it was revealed that the information originally came from the 24th legislative district of New Jersey.

In summary, NJN produced a story that was provided to them by an unnamed Northwest New Jersey legislative office and that NJN claims was verified by unnamed former employees who NJN characterized as “whistleblowers”. NJN also claims to have received information from certain unidentified “insiders”. The story itself, which we will examine more thoroughly below, fails to support allegations of any serious management or fiscal irregularity despite the dramatic introduction by NJN.

Public Records Request

Our first contact regarding this matter with NJN State House Correspondent Zachary Fink of NJN occurred via telephone on June 14. He requested copies of DRPA’s Management Audits. DRPA informed the reporter that we prefer a written request (via email or otherwise) in order to avoid errors or confusion. On June 15, he filed an official document request for copies of the results of the last three triennial elections of officers to the board and any documents authorizing outside employment of DRPA employee Michael Joyce. These were the only formal requests made by NJN through the reporter prior to the June 30th story.

The requested documents were gathered and prepared for delivery to the reporter on June 23. Between June 23 and June 29 an email from him and a phone call from News Director, Michael Aron, questioned our practice of charging fees for staff time research and making copies of the requested reports. The policy to charge reasonable fees is supported in open public records statutes, including New Jersey’s statute. The reporter informed us on June 28 NJN could pay the $63 of fees and the packet requested was prepared for delivery to NJN.

On June 29, DRPA responded by providing the reporter with the materials in his written request. They included copies of the Board minutes for the three most recent triennial elections as requested by the reporter in writing, the 1996 and 2001 Management Audits, and the outside employment authorization for Michael Joyce. Thus, NJN received all of the material that they had requested.

Management Practices and Fiscal Policies at the Authority

When the current administration arrived at the DRPA in 2003, we found a structural operating deficit of $15 million and Authority debt exceeding $1.1 billion. DRPA’s annual debt service payments were approximately $100 million and were anticipated to grow due to risk laden refinancing schemes. We began a program to not only examine our capital needs but also our operating standards. Below are some of the significant highlights of what has been done to control expenses and concentrate on our core businesses. Cost efficiency continues as a top priority now and into the future.

In the first two years, we reduced staffing by over 120 positions – a 12% reduction in force and have maintained a workforce of approximately 900 employees. We have frozen salaries over several years and negotiated 3% salary increases with our organized labor employees.

We instituted a cost containment program which sharply curtailed items such as travel, vehicle and equipment purchases.

We reduced subsidies to several of our lines of business including restructuring ferry operations, spun off the World Trade Center of Greater Philadelphia as a stand alone organization, closed AmeriPort and opened the Cruise Terminal for additional revenue opportunities beyond cruising.

We have sold excess properties, consolidated space and increased office rentals by leasing two additional floors in our office building, One Port Center.

We have pursued outdoor advertising revenue at bridge properties and PATCO.

We have leased Authority property for cell tower communication networks.

In 2004, we implemented employee and retiree health care premium contributions for the first time. We added an HMO managed care plan and wellness programs to help manage our claims experience and contain premium costs. We restructured our health care program for all 65+ retirees, moving from a Medicare Risk Plan platform to Medicare becoming the primary provider of medical care. Also, in an effort to contain costs and to define the pool of retirees eligible for medical and prescription benefits, all new employees hired on or after 1/1/2007 are no longer eligible for retiree health care benefits. In 2009, we successfully negotiated Composite Rate Caps with the health care carrier.

We kept our bridges safe, secure and serviceable while greatly paring back our capital program for a period of 9 years deferring maintenance projects to alleviate the need for a toll increase for close to a decade.

These and other initiatives have resulted in a savings of millions of dollars to our customers.

As a result of these actions, DRPA and PATCO actual operating expenses have increased by an annual average of 0.1% over the period 2003 through 2009, excluding debt service and related costs.

Subsidies

In its report, NJN alleges that DRPA is able to enjoy independence from oversight by New Jersey and Pennsylvania because DRPA receives $242,000,000 in toll revenues thus allowing DRPA to function without subsidies from New Jersey and Pennsylvania. In fact, the Compact creating the DRPA specifically provides that DRPA has no claim on or right to receive any subsidy from either Pennsylvania or New Jersey. The same Compact provides that the Commissioners who serve as members of the DRPA Board are appointed by the Governors of the two states (other than two ex officio members from Pennsylvania).

Triennial Elections

Although NJN states that it requested Minutes for the five most recent elections of Board Officers, in fact their written request was for the three most recent elections and DRPA provided NJN with exactly what NJN requested. NJN claims, inaccurately, that the DRPA did not hold such elections as required under its By Laws. The By Laws are easily accessible and would have provided to NJN had NJN asked. The By Laws do not mandate a “triennial election” as claimed by NJN. The By Laws actually indicate “Election of officers subject to election shall take place at a triennial meeting in January or at a time designated by the Chair and Vice Chair.” (emphasis added.) DRPA, like many other organizations, occasionally defers such elections. The relevant Board offices continue to be filled, the decisions continue to be made, and there is no adverse impact. NJN also claims that in addition to the elections for Board Officers being held every three years “the same is true of officers”. If NJN intends to refer to staff level officers they are wrong; there is no such requirement.

Chief Public Safety Officer Michael Joyce

During an interview with Richard Brown, DRPA General Counsel, on June 16, 2010 the reporter verbally requested information on the salary of Mike Joyce. During the recorded interview, Mr. Brown told the reporter to submit the request in writing and he agreed to do so. No such request was ever received.

Although NJN in their report questioned Mr. Joyce’s qualifications based on anonymous sources, NJN never asked DRPA about his qualifications. Mr. Joyce has an extensive background in law enforcement in positions held from 1987 to the present, including U.S. Department of Labor Investigator, a criminal enforcement instructor, New Jersey Municipal Prosecutor, New Jersey Assistant Attorney General and Deputy Director, Division of Gaming, Casino Criminal Prosecution Bureau, as well as participating as instructor and lecturer in numerous instructional training programs during this time period.

Mr. Joyce’s salary is $180,081 and he also receives a $9000 a year car allowance.

The Delaware River Port Authority has a policy on the subject of Outside Employment. The policy was put in place to provide all employees with an explanation of rights and responsibilities in the matter of their participation in outside employment while employed in a regular full-time position with the Authority. This policy is attached.

Mr. Joyce followed all of the procedures stated in the attached policy and was granted approval for outside employment. As provided to the NJN reporter in response to his public record inquiry, Mr. Joyce is “Of Counsel” to the private Law Firm of Timothy J. Higgins, located in Cherry Hill, NJ, and does not hold a second public job. Pursuant to a 2010 Township of Pennsauken Resolution, adopted January 3, 2010, the Higgins law firm was appointed Solicitor for the Township. Mr. Joyce is not named as the solicitor for Pennsauken.

Code of Ethics

Despite the NJN focus on the existence or non-existence of a DRPA Code of Ethics, NJN and the reporter did not request a copy of the DRPA Code of Ethics in his public records request and had they done so DRPA would have provided the document to them. A copy of the Code of Ethics in the DRPA Policy Manual and DRPA By Laws is attached.

Economic Development

In 1992, the Commonwealth of Pennsylvania and State of New Jersey, through its legislature, with the approval of Congress and the President, directed a DRPA Compact amendment adding regional development as a part of our responsibility. Since 1992, DRPA has become a major force in the drive to improve the region’s economic climate, especially along the waterfront. The only economic development project referred to in the news story was an energy conservation pilot in which DRPA played a minor role in assisting a private energy conservation company in a pilot project on the Delaware River waterfront.

In 2005, DRPA worked with AeroVironment, a California-based engineering firm that designs, develops, and produces efficient electric energy technologies, to implement an “energy conservation” pilot project. AeroVironment selected the Adventure Aquarium as the location for the installation of their wind engine turbines. AeroVironment engineers designed and oversaw the installation of the turbines and AeroVironment, as the company that developed, designed and installed the technology, had the sole responsibility for all project decisions.

DRPA’s role was as a facilitator to the project. We worked with the Adventure Aquarium and NJ Treasury (owner of the Adventure Aquarium building) to assist AeroVironment in gaining access to the rooftop. DRPA’s investment from our Economic Development fund was $40,000 towards this project. Design, construction, installation, and associated costs for access to the Aquarium rooftop were absorbed by AeroVironment. They also provided an interactive informational “kiosk” that was installed in the Aquarium to help educate visitors on wind energy.

It is important to note that as it relates to the DRPA, Economic Development funding has been a controversial topic over the years and, on August 20, 2008, the DRPA/PATCO Board voted, going forward, that no monies from the toll and fare increases would be used for regional economic development. The Board’s decision will be further memorialized in all future bond covenants.

Management Audit

NJN requested and received copies of the 1996 and 2001 Management Audits conducted as provided for in the DRPA Compact. During the above mentioned recorded interview with Richard Brown, DRPA General Counsel on June 16th NJN asked whether the 2001 Management Audit was “final” as noted on the cover of that report, and the DRPA Management representative said that it is final. On June 30th, hours prior to running their story, NJN called and made an informal request for information about whether the DRPA Board approved the 2001 Management Audit. The Management Audit requirement in the Compact contains no provision for adoption by the DRPA Board and there is no procedure for the DRPA Board to adopt Management Audits. Despite being given a copy of the 2001 Management Audit with the word “Final” stamped on the outside, and despite being told by DRPA Management that the 2001 Management Audit was “final” NJN relied on one of its alleged unnamed whistleblower sources in order to assert that the 2001 Management Audit was not actually “final”.

With respect to the current Management Audit, it is well documented and has been widely reported that the DRPA Commission did not meet from December of 2005 until May of 2007. During that time period there were no Board Meetings to approve hiring a consulting firm to perform the Management Audit. When the Board resumed meeting it needed to deal with an accumulation of matters from the past months after which the Board approved hiring a consulting firm to perform the Management Audit. As explained to NJN, the current Management Audit is in process and should be completed in the near future.

In the follow-up NJN News Report of Thursday, July 1, 2010, NJN alleges DRPA Commissioners receive salaries and perks. This is incorrect. The Commissioners receive no salary or perks.